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Altron finalising non-core asset sales

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 22 Aug 2017
Altron group CEO Mteto Nyati.
Altron group CEO Mteto Nyati.

Altron plans to dispose of all non-core assets within the group by the end of the current financial year, ending in February 2018. This is according to CEO Mteto Nyati, who was sharing an update on Altron's business strategy at a media briefing in Johannesburg today.

Nyati only took up the leadership role in April and is pushing forward with plans to revitalise the company after a number of challenging financial years, including a loss of over R1 billion in total revenue for the year ended 29 February 2016.

A major part of this strategy is selling off various non-core assets and focusing on the company's core operations which are turning a profit. Altron has already disposed of some, including selling its Powertech Batteries business to Trinitas for R300 million last month. It sold a controlling equity stake in Aberdare Cables South Africa to Hengtong Optic for R1.2 billion in April 2016. In February 2016, the Competition Tribunal approved the disposal of the Altech Autopage subscriber bases to telecoms operators Cell C, MTN and Vodacom, in a deal worth R1.5 billion.

"We have set ourselves a target of disposing of all non-core assets by the end of February next year. The assets we still need to sell are the Powertech Transformers and Altech UEC, and both of those we would like to have sold by the end of the financial year," Nyati said today.

Altron has completed a strategy review and Nyati said it is successfully implementing the consolidation and realignment of the technology firm towards a new era of growth and expansion. As part of its strategy review, it has streamlined its management structure and simplified its operations.

"We are making significant headway in implementing our plans and our vision to be the leading technology solutions company that delivers innovation that matters and has a meaningful impact on society by addressing challenges facing our communities in South Africa, the continent and globally, while delivering shared value for our stakeholders and inspiring pride in our employees," Nyati told journalists.

"We have spent a lot of our time this year reorganising the business to make operations more cost-effective and to unify the different parts of the business so that we operate as one Altron," he said.

This includes reducing the staff at the Altron head office by around 40%, from around 100 down to 60, which will result in savings of between R50 million and R60 million per year.

The Altron group employs more than 8 000 people globally and Nyati pointed out that the company's previous structure was quite heavy at a management level.

"We have embarked on our drive to continue to try and find ways to be a more lean company. So in Bytes Document Solutions we have gone through a similar kind of exercise; we have combined two units and that combination will give about R30 million in savings."

This through cutting around 75 jobs at Bytes Document Solutions.

"At a revenue level we would like to be growing in the high single digits, and we believe we will be able to do that given the fact that we are not as well penetrated within our customers as we could be. So by just selling more to the customers we already have, we believe we can take market share," he said.

This after Altron's latest set of financial results showed headline earnings per share swinging to a profit of 71c from a loss of 145c posted in the prior year. However, group revenue was down by 26% to R19.7 billion for the year ended 28 February.

"Our intellectual property capital in the healthtech, fintech and safety and security verticals, combined with our global partnerships with leading international original equipment manufacturers, is part of our differentiation and local relevance strategy," Nyati explained.

In the South African market, Nyati said he wants to accelerate the growth of the Altech Netstar business, particularly in fleet management and telematics to add to its growing subscriber base.

Going forward, Nyati reiterated what he told ITWeb in May, that Altron plans to strengthen its position in international markets and grow its presence on the African continent.

Beyond Africa, Altron believes it has good traction in Australia and the United Kingdom. In the Australian market, the July 2017 acquisition of Fleet Logistics and the acquisition of Pinpoint Communications in 2015 are showing a growing subscriber base and a dominant position in the fleet management industry, with an installed base of over 40 000 vehicles. In the UK, the company is also looking for acquisitions to build on its success through its Bytes UK technology business.

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